It is never easy to lose a loved one. While we are in mourning, we should be reflecting and remembering all the things that made our loved one so special.

Your family, should be able to deal with their emotions and take the time to come to terms with their loss. The last thing they should be worrying about at a time like this is a lack of finances to give you a dignified funeral. By making a small monthly payment towards a funeral plan, you can spare your family the anxiety of having to come up with the money to ensure you have a dignified funeral.

Cover for the Whole Family

With the cost of a funeral ranging between R7 000 and R50 000, funeral insurance provides access to funds to pay for the funeral at a time when access to funds is a challenge due to the deceased’s estate being wound up. As with all financial and insurance products, funeral insurance also starts with your needs, which should be uppermost in your mind when you start shopping around.

These needs include looking at who you want to include in the cover: yourself; yourself and your immediate family; cover for your extended family - this could include your mother, father, brother, aunt, uncle and even your in-laws.

Consulting a Financial Adviser

As it is a financial product, you might want to consult a financial adviser before selecting a plan from the wide variety of plans that are available today. That said, many financial institutions selling these policies have made online applications extremely easy and therefore have eliminated the need for fianncial advice and expert assistance.

How to Find & Compare Funeral Cover

With so many institutions providing funeral insurance, you will have a wide variety of providers to choose from and compare. It is always a good idea to use a comparison website to compare the benefits against costs and see what extras or unique features are available.

The next step is to obtain an insurance quote from your preferred institution. If you find the quote doesn’t suit your pocket, just scale down on the benefits you require and you will see the quote decrease. You can continue to do this until you are happy that the amount you are to pay suits your pocket. 

Purchasing Extras and Value-Adds

Almost all the providers of funeral insurance policies and products provide a range of add-ons and value-adds that you or your family can benefit from when a loved one passes on.

In contrast to most other insurance options, such as medical insurance, where purchasing more benefits will cost you more, in some instances purchasing more products when it comes to funeral insurance might cost you less.

In other instances, you can add services such as call centre assistance and even ambulance assistance in the case of a life-threatening medical emergency to your standard policy at an additional premium.

Where a ‘cash back’ benefit applies to these policies, for example as offered by Old Mutual to members of their Standard and Comprehensive Plans, policy holders receive an amount back in cash after every 36 premiums received (the Old Mutual benefit).

Other unique add-ons that you can purchase together with funeral insurance include an education benefit, such as that offered by Liberty with their Standard or Comprehensive Funeral Plans. This benefit will assist you to secure your child’s education in the event of your death by assisting with the cost of such education.

Another example of such a value-add offered in addition to insurance policy benefits but, at no extra cost to funeral plan policyholders, is Old Mutual’s More4U – assistance, treatment and support when you and your loved ones need it most.

Funeral Insurance has Come a Long Way!

While financial service providers were around in South Africa in 1913 (Assupol), information about which providers were selling what type of products during those early years was not readily available. The earliest ‘roots’ of funeral insurance, tracing it back to the end of World War I in 1918, could be found on AVBOB’s website.

According to their website, it has almost been a century since funeral insurance (in the form that AVBOB used to offer it before they became a ‘mutual society’) first saw the light of day in South Africa. Indeed, says AVBOB, the roots and humble beginnings of funeral insurance in South Africa can possibly be traced back to the end of World War I in 1918, which brought post-war depression, widespread poverty and deprivation of resources.

In addition to thousands of young men losing their lives during the war and leaving their families destitute, veterans returning home brought with them one of the worst viral epidemics of the time, known as the “Spanish Flu”.

By the end of October 1918, the flu pandemic had killed between 50 and 100 million people worldwide. In South Africa, more than half a million people died and, in some cases, entire communities were wiped out within a short period of time.

As a result of the above, more funerals were taking place daily and rising prices for these were the order of the day. With everyone facing financial difficulty, people could not pay for a funeral, the average cost of which was around £25 (R50). No credit was extended, and they were forced to pay cash rather than face a humiliating pauper’s funeral.

A Benevolent Fund or Burial Society was Established

The establishment of a benevolent fund or burial society allowing people to make small, regular contributions to the fund provided a solution and during 1918, such a Society, known as  ‘Afrikaanse Verbond’, was established, which quickly grew in numbers and funds, yielding enough funds needed when members died, but lacking the infrastructure and capacity to conduct funerals.

In the following year, a business known as the ‘Bloemfontein Begrafnisfonds’ was established with the capability to operate like a burial society but with the capacity to conduct funerals as well; this seemed to be a near-perfect and complete solution. However, less than three years after its inception, the company was on the brink of bankruptcy! In 1921, it was taken over by the ‘Afrikaanse Verbond’ and was renamed ‘Afrikaanse Verbond Begrafnis Onderneming Beperk’ or AVBOB.

One H.H. van Rooijen was appointed chairman of the board and the first full-time manager at AVBOB, on 1 December 1922. While the organisation had only 400 members at inception, it had by 1934 established 80 branches all over South Africa. In the same year, nine new branches were opened and by June 1938, AVBOB had more than 30 000 members. In 1948 it became the first organization to sell funeral policies to all South Africans.

The first steps to convert AVBOB to a Mutual Society (which it is today), were taken in 1949 and on 16 March 1951, the Private Act - that led to the establishment of AVBOB Mutual Assurance Society - was promulgated and approved.

Today, the Society has more than 1.3 million policyholders with more than 3 million life insurance policy holders. Employing nearly 4 000 people in 151 funeral agencies, 72 insurance offices and a manufacturing plant, it is Africa’s largest Mutual Assurance Society providing a one-stop funeral insurance and burial solution.

In the words of AVBOB’s CEO, Mr Frik Rademan, the Society’s mutual status enables it to distribute all profits to policy holders. “We have once again demonstrated the enormous benefits to be gained from our mutual status".  As one of the few remaining mutual societies in South Africa, we are able to offer benefits to our policyholders that our competitors cannot match,“ he said at the announcement of the financial results for the 2013/2014 financial year.

Today, a myriad of insurance companies, as well as some banks and financial services companies also offer funeral insurance products. However, few South Africans consider funeral insurance as essential until a loved one passes on and funeral arrangements have to be made.

Groceries and even Airtime Provided for!

The Clientèle Funeral Dignity Plan provides more than R50 000 family cover at a cost of just R99 per month. Up to 13 people can be included and covered on one plan that pays out within just 24 hours. Upon claiming, policy holders get R200 free airtime, while the policy also includes a grocery and unveiling benefit.

Metropolitan Funeral Plan

Paying out within 48 hours of receiving a valid claim, provided that the correct documentation is received, the Metropolitan Funeral Plan provides funds to pay for the funeral, flowers, food and beverages as well as other costs associated with a funeral, such as travelling and accommodation for guests. You can choose cover from R5 000 to R50 000 for a monthly payment from as little as R36.

Who is Covered

The minimum age to become a policy holder is 19 years (at the next birthday), and the policy can provide cover for the policy owner only, or may include a life partner or children (in addition to the policy owner). In the case of a family policy, both a life partner and children are covered, while parents can also be covered as a standalone policy.

Free Accident Cover 

The Metropolitan Funeral Plan also provides accident cover in the case of the death resulting from an accident of the policy owner, his or her life partner, children or parent older than 14 years and is covered under the policy (death resulting from war, civil uprising, wilful self-injury, drug or alcohol addiction are EXCLUDED).

In addition, a paid up benefit is offered, which means that no further premiums will be payable at the death of the policy owner, but cover will continue for all surviving participants that are beneficiaries at the time of the policy holder passing on.

While this ‘paid up’ feature is offered by other funeral insurance products as well, some conditions apply, for instance in the case of Assupol, this benefit is automatically included at no additional cost only if the policyholder is younger than 55 years at the start of the policy. If you reach the age of 65, no premiums will be payable any more, while all the benefits of the policy as signed up for, remains in force.

A 30 Day Cooling Off Period

In line with legislative requirements, the Metropolitan Funeral Plan, like many other funeral insurance products, provide for a cooling-off period of 30 days from the date on which the offer or online insurance quote, was accepted, and the policy holder can cancel the policy or make changes to it in this time.

In the case of the policy holder cancelling the policy within the above time period, he or she is entitled to a refund of premiums paid up to date. Some insurance companies will deduct the cost of any cover enjoyed during this period from the refunded amount. In other instances, no refund will be offered if claims have been made and paid during the 30-day period.

A Final Word on Funeral Cover

With so many funeral insurance products available in South Africa, shopping around for the plan that best suits your needs is easy. However, just a word of caution regarding all the value-adds and add-ons that are available to purchase with your funeral insurance. If you would like to add some of these and they come at no additional cost, it might be worthwhile.

However, take care when including offerings such as critical illness, educational support and ambulance services in case of a medical emergency in addition to pure funeral services and products at an additional cost, as you might be paying for cover you already have in the form of term life insurance or health cover.

Having said that, if those ‘duplicate’ products provide the same cover at a cheaper premium, you could consider moving your policy to this provider, but before making that decision, make sure you familiarise yourself with the fine print of the ‘add-on cover’.